Something missing from GST debate: a Robin Hood Tax

BAD BANKS media release 
25 April 2010

"There’s something missing from the current debate about GST, and that’s a tax alternative, one that targets the banks and financial speculators," says Vaughan Gunson, Bad Banks spokesperson.

"Instead of making food and other basics more expensive for grassroots people, New Zealand needs to introduce a Financial Transaction Tax, or Robin Hood Tax as it’s been named by a popular British campaign," says Gunson.

"A small percentage tax on financial transactions would net billions annually from the big banks and financial speculators, who shift enormous amounts of money around everyday," says Gunson. "We could then remove GST from our food and begin to phase out this horrible regressive tax altogether. This is the circuit breaker that the GST debate needs." 

"Following the global financial implosion, and the role played by the banks and financial speculators, the time is right to introduce a tax which hits the most hated global purveyors of greed and exploitation. Yet the government is heading in the other direction, wanting to give tax breaks to these parasites, while hitting us with a GST increase," says Gunson.

Prime minister John Key wants to reward international financial speculators with tax breaks and other incentives, as part of his dream of turning New Zealand into a financial hub. The plan rests on enticing global investors to New Zealand with the promise of tax breaks. A recent IRD report entitled ‘Allowing a zero per cent tax rate for non-residents investing in a PIE [portfolio investment entity]’ reveals what's being considered. Under this proposal, overseas investors would be allowed to operate in this country and not pay New Zealand tax on their international investments.

"John Key would say that removing GST from food is too complicated - yet it’s not too difficult to change the tax laws to gift more profits to international fat cats?" asks Gunson. "Whose side are you on Mr Key? Hardworking grassroots people or the financial parasites?"

The Bad Banks campaign has drafted a letter to the prime minister on behalf of the grassroots people of New Zealand. It reads:

Dear Mr Key,

Why are you wanting to raise GST? Food and everything else will be more expensive. It's already hard to make ends meet. Why don't you tax the banks and other fat cats that have been ripping us off? We want justice Mr Key, make them pay.

Signed,
Grassroots people of NZ

With the letter the Bad Banks campaign is raising three "common sense" measures to curb banking power and protect grassroots people, which includes introducing a Robin Hood Tax. They are:

1. Stop forced mortgagee sales
Regulatory muscle used to stop banks turfing people out of their homes. A government body to oversee the re-negotiation of mortgages based on current market values and ability of the homeowner to pay.

2. Turn Kiwibank into a proper public bank
Offering 3% interest loans to first home buyers, zero-fee banking for people on modest incomes, and low interest loans to local bodies for sustainable eco-projects in the public good.

3. Introduce a Robin Hood Tax (also known as a Financial Transaction Tax)
A small percentage tax on financial transactions would net billions of dollars from banks and global financial speculators. GST could be phased out.

"We’re inviting people to sign-on electronically to our letter to prime minister John Key via the Bad Banks website www.badbanks.co.nz (or go directly to http://www.ipetitions.com/petition/badbanks/). We think a clear message needs to be sent to the government and John Key that it's the banks and other financial fats cats who must be made to pay," says Gunson.

The cartoon by KLARC accompanying this media release is available to be reproduced in print and web publications. For a bigger resolution image contact Vaughan at the email below.

For more comment, contact

Vaughan Gunson
Bad Banks spokesperson
svpl(at)xtra.co.nz
(09)433 8897
021-0415 082

The Crisis of Credit Visualised

The two animation videos below offer a very understandable explanation of the financial crisis sparked by the house price bust in the US. The representation of high risk mortgage borrowers is dodgy (you'll see what I mean), but on the whole their good. They show why the current strategy pursued by the global elites, basically pumping trillions of public money into the debt economy is doomed to fail. The big banks and other financial institutions want the party to continue of course - there's mega-profits to be made! So they aren't going to stop willingly. Hence the need for campaigns that target the banks and raises economic alternatives to a hyper-financialised economy that's one very big ticking bomb. To start building some public pressure against the banks sign the Make the Banks Pay online petition today, go to http://www.ipetitions.com/petition/badbanks/. Tell your friends.

The Crisis of Credit Visualised (Part 1)

The Crisis of Credit Visualised (Part 2)

Let’s Put an End to Public Debt Blackmail!

by Damien Millet and Sophie Perchellet and Eric Toussaint
from Global Research
3 April 2009

There is a striking contrast in the most industrialized countries at the epicenter of the global crisis that broke out in 2007-2008: the governments and their friends running the major banks are congratulating themselves on having saved the financial sector and initiated limited economic recovery, but people’s living conditions continue to deteriorate. Furthermore, with stimulus packages for the economy of over 1000 billion dollars, the major financial institutions have received government aid in the form of bail out funds, but the different States have no say in the management of these companies or are not taking advantage of this opportunity to radically change the policies governing them.

The path chosen by governments to emerge from the private financial crisis caused by bankers has led to an explosion in public debt. For many years to come, this sudden growth in public debt will be used by governments as a form of blackmail to impose social cuts and to deduct from the wages of “those at the bottom” the money needed to repay the public debt now held over our heads by the financial markets. How will this scenario be played out? Direct taxes on high income earners and companies will be reduced, while indirect taxes, such as VAT, will increase. Yet, as a percentage of disposable income, VAT is mainly a burden on low income households, which makes it an extremely unfair tax. For example, with a 20% VAT tax, a poor household that spends all its income just to survive, pays the equivalent of a 20% tax on its income, whereas a well off household, which saves 90% of its income, and therefore only spends 10% of it on daily expenses, pays the equivalent of a 2% tax on its income.

Therefore, the richest win twice: as a percentage of their disposable income, they contribute the least amount to taxes, and with the sums they have saved, they buy stocks of public debt and make profit from the interest paid by the State. On the contrary, wage earners and pensioners are doubly penalized: their taxes increase while public services and their social security benefits deteriorate. The repayment of public debt is therefore a mechanism for transferring revenue from “those at the bottom” to “those at the top”, as well as an effective form of blackmail in order to pursue neo-liberal policies benefitting “those at the top”. 

Meanwhile, profits and bonus distributions (in 2009, 1.75 billion euros in bonuses for the traders of French banks, and 20.3 billion dollars for Wall Street traders -- a 17% increase compared to 2008!) have returned to their mad ways while the people are called upon to tighten their belts. In addition, with the easy money central banks lend them, bankers and other institutional investors have launched into new speculative operations, which are highly dangerous for the rest of society, as we have seen with the Greek debt for example, not to mention the price of raw materials and the dollar. Not a word from the International Monetary Fund (IMF) or the Organization for Economic Cooperation and Development (OECD), and a refusal from the G20 to take measures on bonuses and speculation. Everyone agrees to intensify the race for profit based on the pretext that this will eventually lead to job creation. 

The Finance Ministers’ overall objective is a return to growth, even if it turns out to be unequal and harmful to the environment. In no way do they question the system which has proven to be a failure. If they do not react, the dismantling of the State will be pushed to its limits, and the entire cost of the crisis will be borne by the very people who are its victims, while those responsible for it will emerge more powerful than ever before. Today, banks and hedge funds have been saved with public money without offering the slightest tangible compensation in return.

We believe public policy should be reformulated as follows: “You large creditors have greatly profited from public debt, but fundamental human rights are seriously threatened and inequalities are widening at an alarming rate. Our priority is to maintain and guarantee these fundamental rights and it is you, the large creditors, who should pay for this. We are going to tax you according to the amount that you loaned back to us: the money will not come out of your pockets but the loans will disappear. Count yourselves lucky that we are not demanding back the interest we have already paid you to the detriment of citizens’ interests!” In a nutshell, we support the idea of taxing the large creditors, such as banks, insurance companies, and hedge funds, as well as wealthy individuals according to the money owed to them. This tax revenue would give the State the means to increase social spending and create socially useful and economically sustainable employment. It would eliminate public debt in the North, without making the people who are the victims of this crisis pay. At the same time, it would place the entire burden on those who have caused or worsened the crisis, and have already greatly profited from this debt.

Our proposition would entail a radical change towards a policy of redistribution of wealth, benefiting those who produce wealth and not those who speculate on it. If coupled with the cancellation of foreign public debt of developing countries and a series of reforms (including wide ranging fiscal reform, a radical reduction in working hours without loss of wages and with compensatory hiring, and the transfer of the financial sector to the public domain with citizen control), these measures could enable us to emerge from the current crisis with social justice and in the interests of the people.

Translated by Francesca Denley in collaboration with Charles la Via.

Eric Toussaint is Spokesman, vice-president of CADTM France and president of CADTM Belgium, Committee for the Abolition of Third World Debt, www.cadtm.org.

Rolling Stone: Looting Main Street

by Matt  Taibbi
from Rolling Stone
31 March 2009

If you want to know what life in the Third World is like, just ask Lisa Pack, an administrative assistant who works in the roads and transportation department in Jefferson County, Alabama. Pack got rudely introduced to life in post-crisis America last August, when word came down that she and 1,000 of her fellow public employees would have to take a little unpaid vacation for a while. The county, it turned out, was more than $5 billion in debt — meaning that courthouses, jails and sheriff's precincts had to be closed so that Wall Street banks could be paid.

As public services in and around Birmingham were stripped to the bone, Pack struggled to support her family on a weekly unemployment check of $260. Nearly a fourth of that went to pay for her health insurance, which the county no longer covered. She also fielded calls from laid-off co-workers who had it even tougher. "I'd be on the phone sometimes until two in the morning," she says. "I had to talk more than one person out of suicide. For some of the men supporting families, it was so hard — foreclosure, bankruptcy. I'd go to bed at night, and I'd be in tears."

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